Land Securities Group Plc · LSE:LAND
Land Securities — FY2024 Earnings Presentation
50 slides from Land Securities's earnings presentation, May 17, 2024
Slide 1: Our Annual Results for 31 March 2024
OUR ANNUAL RESULTS for 31 March 2024 @LandsecGroup Landsec.com
Slide 2: Annual results 2024
Annual results 2024 Mark Allan CHIEF EXECUTIVE OFFICER
Slide 3: Our strategic focus
Landsec — Annual results 2024 3 Our strategic focus Grow our investment in best-in-class, high-growth urban places Shaping & curating our places to drive growth Delivering attractive income-led total returns Capitalising on future growth potential Nova, Victoria Bluewater Finchley Road, London C. 80
Slide 4: Quality is key to driving income growth
Landsec — Annual results 2024 4 Quality is key to driving income growth Outperforming in increasingly polarised markets Central London Major retail destinations £10bn portfolio(1) % Landsec occupancy vs overall London office market - CBRE % Landsec occupancy vs overall UK retail market - LDC 100 100
Slide 5: Investment market outlook improving
Landsec — Annual results 2024 5 Investment market outlook improving Substantial capacity to invest at attractive point in time Values beginning to stabilise Pro-active capital recycling Balance sheet poised for growth 62 Buckingham Gate, Victoria Novotel, Hammersmith St David’s, Cardiff c. 60% of po
Slide 6: Continued strength in operational performance
Landsec — Annual results 2024 6 Continued strength in operational performance Occupancy, rents and lease reversions up Central London Major retail Mixed-use Piccadilly Lights White Rose, Leeds Mayfield, Manchester £35m of lettings 6% above ERV £37m of lettings 6% above ERV Planning secured at Finchl
Slide 7: Resilience in earnings
Landsec — Annual results 2024 7 Resilience in earnings 2.8% LFL income growth and lower overhead offset rise in finance costs 31 March 2024 31 March 2023 % change EPRA EPS 50.1p 50.1p(1) - Dividend per share 39.6p 38.6p +2.6% EPRA NTA per share 859p 936p -8.2% Total return on equity Pro forma -4.0%
Slide 8: Operational review
Operational review Mark Allan CHIEF EXECUTIVE OFFICER
Slide 9: Two key principles of sustainable value creation
Landsec — Annual results 2024 9 Two key principles of sustainable value creation Focus on three key competitive advantages and balance sheet strength High quality portfolio Strong customer relationships Ability to unlock complex opportunities Gunwharf Quays, Portsmouth New Street Square, City n2, Vi
Slide 10: Central London: Evolving customer demand drives polarisation
Landsec — Annual results 2024 10 Central London Evolving customer demand continues to drive polarisation Clear bifurcation — Total London office market vacancy by number of buildings Customers focused on best-in-class space % 36% of vacancy to attract and retain key talent 40 is in 1% of buildings —
Slide 11: Central London: Investing in our best places
Landsec — Annual results 2024 11 Central London Investing in our best places Five largest places make up 88% of London portfolio — Split by value(1) Creating places where people want to be — New openings Piccadilly New Street Square BAM Lucent rooftop restaurant Victoria Southbank One New Change Inc
Slide 12: Central London: Insight in customer decision-making
Landsec — Annual results 2024 12 Central London Insight in what is driving our customers’ decision-making Utilisation continues to grow Customers planning for more space More upsizing than downsizing Unique daily turnstile tap-ins across Landsec portfolio Average sq ft / person for leases signed wit
Slide 13: Central London: Continued strength in operational performance
Landsec — Annual results 2024 13 Central London Continued strength in operational performance Two profitable developments completed in last 12 months £30m of rent signed, 5% ahead of ERV £5m of rent ISH, 9% above ERV 15% uplifts on relettings / renewals Occupancy +140bps to 97.3% vs 91.2% for market
Slide 14: Major retail destinations: Investing in our best places
Landsec — Annual results 2024 14 Major retail destinations Investing in our best places Five largest places make up 75% of major retail portfolio — Split by value Creating places where people want to be — New initiatives CGI of Trinity Leeds St David’s Trinity Gunwharf Quays Bluewater White Rose CGI
Slide 15: Major retail destinations: Customer decision-making insight
Landsec — Annual results 2024 15 Major retail destinations Insight in what is driving our customers’ decision-making Landsec locations are outperforming Focus on fewer, bigger, better stores Growing demand for best space Overall sales growth vs sales growth in Landsec stores Change in brands’ stores
Slide 16: Inflection point in rental uplifts on relettings
Landsec — Annual results 2024 16 Major retail destinations Inflection point in rental uplifts on relettings / lease renewals 93.2% 91.5% Major retail destinations occupancy — Continued growth over last three years Total retail sales +4.1% YoY with LFL sales +1.5% % 100 Footfall +3.9% to c. 93% of pr
Slide 17: Investing in our key places
Landsec — Annual results 2024 17 Investing in our key places Responding to customer demand and driving earnings accretion 93.2% 91.5% Investing in our major retail destinations Started two London schemes for completion in H2 2025 St David’s, Cardiff CGI of Gunwharf Quays Timber Square, Southbank Thi
Slide 18: Further near-term potential
Landsec — Annual results 2024 18 Further near-term potential Pipeline to expand or create next generation of scarce urban places NATIONAL RAIL Southbank Mixed-use 4 sites 24 acres 2.5m sq ft 0.9m sq ft 1,500 homes c. £1.1bn TDC c. £0.9bn TDC Red Lion Court Mayfield, Manchester 2025-30 delivery 2027-
Slide 19: Capital allocation: Return prospects in higher cost of capital
Landsec — Annual results 2024 19 Capital allocation Return prospects in higher cost of capital environment 93.2% 91.5% Unlevered return expectations — Constant cap rates Improved returns for major retail and prime London reflecting attractive yields and rental growth London investment Major retail k
Slide 20: Financial review
Landsec — Financial review Vanessa Simms CHIEF FINANCIAL OFFICER
Slide 21: Financial summary
Landsec — Annual results 2024 21 Financial summary Strong balance sheet underpins resilience of earnings 31 March 2024 31 March 2023 % change EPRA earnings £371 m £371 m(1) - EPRA earnings per share 50.1 p 50.1 p(1) - Dividend per share 39.6 p 38.6 p +2.6 % EPRA NTA per share 859 p 936 p -8.2 % Pro
Slide 22: EPRA EPS in line with guidance
Landsec — Annual results 2024 22 EPRA EPS in line with guidance 4.0% growth in operating profit offsets higher finance cost Gross rental income up £16m, adjusted for £22m 31 March 2024 31 March 2023(1) year-on-year increase in surrenders in prior year £m £m Gross rental income 641 625 Like-for-like
Slide 23: Like-for-like net rental income up 2.8%
Landsec — Annual results 2024 23 Like-for-like net rental income up 2.8% Growth driven by major retail Movement in net rental income (£m) Positive uplifts on relettings / renewals +£13m — Central London +17% Like-for-like growth +2.8% — Major retail +1% +0.4% +6.9% +3.1% Positive LFL growth across a
Slide 24: Improving operational efficiency
Landsec — Annual results 2024 24 Improving operational efficiency Driving overall income and return on equity Difference in operating costs — Mature vs operational assets Administrative expenses down 9%, with further savings expected over coming years Sold Acquired – Mature offices – Major retail In
Slide 25: Strong leasing performance drives 3.2% ERV growth
Landsec — Annual results 2024 25 Strong leasing performance drives 3.2% ERV growth Around 60% of portfolio broadly stable in value in second half Valuation as at LFL equivalent 31 March Surplus / Equivalent yield LFL ERV Valuation surplus / (deficit) % — H1 23/24 and H2 23/24 2024 (deficit) yield mo
Slide 26: Total return on equity improved to -4.0%
Landsec — Annual results 2024 26 Total return on equity improved to -4.0% Rise in yields offsets 9.5% ROE from income, ERV growth & development Total return on equity Movement in EPRA NTA per share (pps) March-22 March-23 March-24 50 10.5% 9.5% 8.1% (39) 5.3% 6.1% 5.0% 936 (84) (3) (1) 4.6% 3.6% 859
Slide 27: Strong capital base provides capacity to invest
Landsec — Annual results 2024 27 Strong capital base provides capacity to invest Net debt and LTV lower than before reset in values No need to refinance any debt until 2026 — Debt maturity by calendar year(1) 31 March 31 March 2024 2023 £m Bond debt Drawn bank debt / Commercial paper Undrawn bank fa
Slide 28: Capital allocation
Landsec — Annual results 2024 28 Capital allocation Enhancing income and total return whilst further improving portfolio quality Current views on sources of funding and opportunities Sold £225m during year plus £400m since year-end, on average in line with March 2023 book value Retail parks Major re
Slide 29: Earnings outlook
Landsec — Annual results 2024 29 Earnings outlook Continued operational growth vs timing effects of investment activity EPS outlook – Impact from capital recycling Expect LFL income growth to be similar to last year EPS expectations for March 2025 and 2026 £572m net disposals since HY reduce EPS by
Slide 30: Overview
Overview Mark Allan CHIEF EXECUTIVE OFFICER
Slide 31: Outlook
Landsec — Annual results 2024 31 Outlook Actively positioning portfolio for growth in polarising markets Long-term view — Property yields vs 10-year gilt yields Demand for best-in-class space remains robust % All property equivalent yield 10-year gilt yield 18 Expect low / mid-single digit ERV growt
Slide 32: Our focus for the next twelve months
Landsec — Annual results 2024 32 Our focus for the next twelve months Drive returns from best-in-class assets, platform and capital base Positive outlook for return on equity when yields stabilise Drive like-for-like income March-22 March-23 March-24 Outlook 10.5% Further optimise operational effici
Slide 33: Appendices
Landsec — APPENDICES @LandsecGroup Landsec.com
Slide 34: Contents
Landsec — Appendices 34 Contents Page Page Page SUSTAINABILITY DEVELOPMENT MARKET ANALYSIS Our sustainability framework 35 Office-led development / major Central London office — demand and existing 42 48 refurbishment returns supply. Sustained demand for best-quality stock Sustainability leadership
Slide 35: Our sustainability framework
Landsec — Appendices 35 Our sustainability framework MATERIAL KEY 2023/24 ISSUES TARGETS PROGRESS Decarbonising Achieve net zero emissions Progressing our Net Zero Transition Investment Plan, with installation of air source heat pumps at first two office sites underway our portfolio by 2040: 24% red
Slide 36: Sustainability leadership
Landsec — Appendices 36 Sustainability leadership Demonstrated by our performance across all key ESG benchmarks Benchmark Latest performance Benchmark Latest performance EPRA 2023 GRESB 2023 Received our 10th Gold Award for best practice Real Estate Sector leader: sustainability reporting 5-star rat
Slide 37: Minimum Energy Efficiency Standards
Landsec — Appendices 37 Minimum Energy Efficiency Standards 49% of portfolio already rated EPC ‘B’ or higher 100% compliant with 2023 MEES regulations requiring all non-domestic rented properties to achieve an EPC ‘E’ or above Net Zero Transition Investment Plan will see 50% of our office portfolio
Slide 38: Valuation movements
Landsec — Appendices 38 Valuation movements As at 31 March 2024 EPRA topped-up LFL Market value Valuation LFL ERV EPRA net initial net initial Equivalent movement in EPRA 31 March 2024 change change yield yield(1) yield equivalent yield occupancy £m % % % % % bps % West end offices 3,109 -3.6 6.9 4.
Slide 39: Operational performance analysis
Landsec — Appendices 39 Operational performance analysis As at 31 March 2024 Annualised Net estimated rental income rental value EPRA occupancy (1) LFL occupancy change (1) WAULT(1) £m £m % ppt Years West end offices 160 186 99.6 0.1 6.5 City offices 70 93 93.7 3.2 7.8 Retail and other 43 55 97.2 1.
Slide 40: Rent reviews and lease expiries and breaks
Landsec — Appendices 40 Rent reviews and lease expiries and breaks(1) Excluding developments Outstanding 2024/25 2025/26 2026/27 2027/28 2028/29 Total to 2029 £m £m £m £m £m £m £m Rents passing from leases subject to review 115 40 41 25 21 38 280 Gross reversion under lease provisions 9 2 0 1 2 6 20
Slide 41: Central London office customers by sector
Landsec — Appendices 41 Central London office customers by sector Diversified customer mix with limited exposure to tech and banks Top 10 customers — Percentage of annualised rental income Customers by sector — Percentage of annualised rental income Secretary of State for Levelling Up, Housing and C
Slide 42: Office-led development / major refurbishment returns
Landsec — Appendices 42 Office-led development / major refurbishment returns Thirty High, SW1 Timber Square, SE1 Status On site On site Estimated completion date Aug 2025 Dec 2025 Description of use Office – 89% Office –93% Retail – 11% Retail – 7% Landsec ownership % 100 100 Size sq ft (000) 299 38
Slide 43: Pipeline of office-led development opportunities
Landsec — Appendices 43 Pipeline of office-led development opportunities Liberty of Southwark Red Lion Court, Southwark, Nova Place, Old Broad Street, Bridge Road, Hill House, Timber Square SE1 SE1 SW1 EC2 SE1 EC4 Phase 2, SE1 Planning Planning Planning Planning Status consent granted consent grante
Slide 44: Mixed-use urban neighbourhoods' development pipeline
Landsec — Appendices 44 Mixed-use urban neighbourhoods' development pipeline Total scheme Earliest Number Estimated Estimated sq ft start of completion scheme Indicative Target yield Ownership (NIA) Planning status on site blocks of phase 1 completion TDC on cost(1) Near-term pipeline % (000) £m % M
Slide 45: Committed capital expenditure on committed pipeline
Landsec — Appendices 45 Committed capital expenditure on committed pipeline £399m committed capex on our two committed development / major refurbishment schemes, delivering £59m ERV Committed Capex by scheme £m Timber Square Thirty High 300 250 £241m 200 £158m 150 100 50 0 March 2025 March 2026
Slide 46: Continuing to curate a new destination in London
Landsec — Appendices 46 Continuing to curate a new destination in London Transforming Victoria from government district to thriving business hub What it was Transformation by Landsec Today CH CH T A IE T A IE 2.5m sq ft REN VE REN VE D D £75 £88 sq ft sq ft Office-led space £2.6bn TDC invested so fa
Slide 47: Creating a 1.4m sq ft net zero office cluster
Landsec — Appendices 47 Creating a 1.4m sq ft net zero office cluster Opportunity to create scale in one of London’s most vibrant areas Six sites within few minutes walking distance Diversified, multinational tenant base Opportunity Historic 5Y take-up by sector (%)1 Connectivity Two of London’s Cov
Slide 48: Central London office: demand and existing supply
Landsec — Appendices 48 Central London office — demand and existing supply Sustained demand for best-quality stock Space under offer Central London availability, new and second-hand (LHS) vs vacancy Million sq ft 10-year average Million sq ft Vacancy rate% 5.0 25 New Second-hand Central London 10 9
Slide 49: Central London: new supply
Landsec — Appendices 49 Central London — new supply 13.4m sq ft under construction of which 42% is already pre-let / ISH Million sq ft Vacancy rate % Completed U/C pre-let U/C speculative Proposed 10-year average Vacancy rate (all grades)(RHS) 15 16 14 12 10 10 8 6 5 4 2 0 0 1984 1990 1996 2002 2008
Slide 50: Important notice
Landsec — Appendices 50 Important notice This presentation may contain certain ‘forward-looking’ statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any out